For millennials, retirement beats home ownership

When we think of financial security, the prospect of a home of one's own is often top of mind. But for millennials, not so much.

In a new survey of American adults commissioned by the National Endowment for Financial Education, half the respondents said retirement savings were their top financial goal, and just 13 percent said home ownership was a top priority. That's a shift from 2011, when 47 percent prioritized retirement and 17 percent focused on home ownership.

For respondents ages 18 to 34, the millennials, the difference was less pronounced—but the shift over time was notable. In 2014, 29 percent said retirement savings was their top goal, and home ownership was tops for just 21 percent of them. Three years earlier, home ownership was the top goal for 26 percent of millennials, while adequate retirement savings mattered most to 25 percent.

Not only that, the share of millennials whose top priority is retiring early has jumped from 6 percent in 2011 to a whopping 26 percent this year.

Is this just millennials delaying maturity, as the moving-back-home cliche suggests? Hardly. Retirement is a laudable savings goal, and Ted Beck, president and chief executive of the National Endowment for Financial Education, thinks this savings priority makes perfect sense for all the survey respondents.

"Americans seem to be finding reassurance in more long-term financial-security-based values rather than material values," he said.

It's quite possible that factors other than maturity are at work. For one thing, this generation came of age during a serious housing meltdown. The concept of a home as a safe investment to take you through life took a serious hit in the mortgage market implosion.

Sure enough, just 39.1 percent of Americans under age 35 owned a home in 2010, down from 43.1 percent in 2004, according to Census Bureau data.

But millennials are also facing another challenge in the form of student loan debt. According to The Institute for College Access and Success, just 47 percent of college grads in 1993 had debt, but that figure had risen to 71 percent by 2012. The average debt load increased faster, from $9,450 in 1993 to $29,400 in 2012. Overall, student loan debt is close to $1 trillion, and now exceeds total credit card debt.

"Having a lot of debt can affect your willingness and your ability to make other commitments like starting a family, buying a home, saving for retirement or starting a business," said Lauren Asher, the institute's president

At least one academic study has taken a stab at measuring the relationship between rising student loan debt and home ownership. In a paper presented at the 2014 Association for Public Policy Analysis and Management conference, Jason Houle of Dartmouth and Lawrence Berger of the University of Wisconsin-Madison concluded that there is a modest but real association between rising student debt levels and rates of homeownership among young people.

If they stick to their plans, millennials ought to someday enjoy comfortable retirements—maybe even early ones. But for now, parents, you should get those basements ready. Your kids aren't going anywhere.